Theory on the real cause of today's chaos

[junoreactor]

Hi folks.
Just sharing this interesting views of a poster on reddit:

The cause of today's chaos is likely large hedge funds using expiring BTC futures contracts as safety nets to exploit the only sure-thing in this market: a large amount of new/overextended investors who are easily moved to panic sell during a flash-crash.

It is likely that such drop is clearly caused by manipulation indeed, I find this theory interesting.
One can also notice that every year since 2015 there is always a drop in January and this may be also due to Chinese new year. This is also possible but I don't believe small holders will cause such drop, so the hedge funds theory is more likely.

You can read more here > theory on the real cause of today's chaos

[1714137599]

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[1714137599]

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[1714137599]

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[slaman29]

Pretty old and recycled theory. I think there has been a lot of evidence, maybe not enough proof yet but there is more research that indeed finds some behaviors of manipulation going on in exchanges, especially since early adopters held a lot of coins, big enough, if working in groups, to make price movements desirable for them. I think a lot of the whales made profit since November, and now they are preparing this crash so they can buy back into crypto even more. Imagine all the Tethers waiting to buy now.

[talkbitcoin]

i have heard this theory before and i think there was a topic in this board also talking about it and i think it is true

the worst part is that when i say it is true i don't mean necessarily there was some manipulation that caused it (although i think it was) but it could have been simply because of the expectation of this to happen!

when the futures stuff started, everyone were speculating about how price is going to drop like this. if enough people believe it will drop they will make sure to sell before the drop and those who delay a little will sell as soon as seeing their prediction is coming true. it is a mentality thing...

[tokeweed]

Then what does this mean...?  That we'll see massive dumps whenever contracts expire?  Isn't this good for traders since the market could become more predictable?  And if it does become 'predictable', wouldn't smarter traders try to exploit this and adjust to counter what the other traders are doing, making the markets react differently from what's expected? 

[junoreactor]

Then what does this mean...?  That we'll see massive dumps whenever contracts expire?  Isn't this good for traders since the market could become more predictable?  And if it does become 'predictable', wouldn't smarter traders try to exploit this and adjust to counter what the other traders are doing, making the markets react differently from what's expected? 

Definitely. To be honest, these markets are still so new that it looks really easy to trade and even do arbitrage and earn quite big even with a small initial investment. It should not last too long though if the market keeps growing. But looks like 2018 will be a decisive year for crypto-currencies: either it will grow massively or be impacted by big regulations in major developed countries. 

[alyssa85]

Hi folks.
Just sharing this interesting views of a poster on reddit:

The cause of today's chaos is likely large hedge funds using expiring BTC futures contracts as safety nets to exploit the only sure-thing in this market: a large amount of new/overextended investors who are easily moved to panic sell during a flash-crash.

It is likely that such drop is clearly caused by manipulation indeed, I find this theory interesting.
One can also notice that every year since 2015 there is always a drop in January and this may be also due to Chinese new year. This is also possible but I don't believe small holders will cause such drop, so the hedge funds theory is more likely.

You can read more here > theory on the real cause of today's chaos

Remember that with these futures contracts, if someone is going short, the other party to the contract is going long.

Sure the shorters have an incentive to try to tank the underlying market in bitcoin. But their counterparties have an equal incentive to prevent the underlying market from dropping...

[RealPhotoshoper]

Pretty old and recycled theory. I think there has been a lot of evidence, maybe not enough proof yet but there is more research that indeed finds some behaviors of manipulation going on in exchanges, especially since early adopters held a lot of coins, big enough, if working in groups, to make price movements desirable for them. I think a lot of the whales made profit since November, and now they are preparing this crash so they can buy back into crypto even more. Imagine all the Tethers waiting to buy now.

51% attack the only thing that i can see as a legit proof of any kind price manipulation.
Otherwise it is just a random speculation , for sure yeaaa theory just a theory , that's how decentralization works to change the value.
A new Big holder won't resist to have more than 20% loss , the massive cutloss causing another bitcoin holder do the same and so on.

[tokeweed]

Then what does this mean...?  That we'll see massive dumps whenever contracts expire?  Isn't this good for traders since the market could become more predictable?  And if it does become 'predictable', wouldn't smarter traders try to exploit this and adjust to counter what the other traders are doing, making the markets react differently from what's expected? 

Definitely. To be honest, these markets are still so new that it looks really easy to trade and even do arbitrage and earn quite big even with a small initial investment. It should not last too long though if the market keeps growing. But looks like 2018 will be a decisive year for crypto-currencies: either it will grow massively or be impacted by big regulations in major developed countries. 

If so then the smarter traders who want to gain an edge would then start formulating counter strategies to exploit what everbody else predicts would happen.  That then would change how the market will turn out making it unpredictable.

[Pursuer]

Then what does this mean...?  That we'll see massive dumps whenever contracts expire?  Isn't this good for traders since the market could become more predictable?  And if it does become 'predictable', wouldn't smarter traders try to exploit this and adjust to counter what the other traders are doing, making the markets react differently from what's expected? 

Definitely. To be honest, these markets are still so new that it looks really easy to trade and even do arbitrage and earn quite big even with a small initial investment. It should not last too long though if the market keeps growing. But looks like 2018 will be a decisive year for crypto-currencies: either it will grow massively or be impacted by big regulations in major developed countries. 

If so then the smarter traders who want to gain an edge would then start formulating counter strategies to exploit what everbody else predicts would happen.  That then would change how the market will turn out making it unpredictable.

why "counter strategy"?
if people can predict a market direction they should logically join it. for example if they expect a large number of shorts and a big drop, they also sell, short, etc to join the movement and make money the same way and then they would buy back at the bottom when the time for it passes which is after the contracts expiry time was reached.
don't you think that is more possible?

[jbkg111816]

Bitcoin has a bubble effect when it increases so much on the other end, then after a past few months it will boom and suddenly prices fell down as low as it can get. But it is has a high possibility to increase again.

[magneto]

Hi folks.
Just sharing this interesting views of a poster on reddit:

The cause of today's chaos is likely large hedge funds using expiring BTC futures contracts as safety nets to exploit the only sure-thing in this market: a large amount of new/overextended investors who are easily moved to panic sell during a flash-crash.

It is likely that such drop is clearly caused by manipulation indeed, I find this theory interesting.
One can also notice that every year since 2015 there is always a drop in January and this may be also due to Chinese new year. This is also possible but I don't believe small holders will cause such drop, so the hedge funds theory is more likely.

You can read more here > theory on the real cause of today's chaos

Doubt that's the real cause. Real cause is most likely still a reaction to the newly imposed government regualtions, especially those of China and Indonesia. It does not affect most of us, but there is no shortage of bitcoin investors in both countries and it could be a problem for them if they don't get rid of their bitcoins quickly for their local currencies.

This initial dump then triggers more dumpers, and in the end there is absolutely no rational actors left anymore on the sell side, and even some long term holders are considering to lessen their bitcoin bags.

But hey, this has to happen sooner or later, and it's almost become a pattern for bitcoin(borrowed from another thread):

[rayk]

That might be true I don't know. But why do we need such theory to explain this crash? I think it would already come , it is even an overdue natural crash.

[henriquelb]

That might be true I don't know. But why do we need such theory to explain this crash? I think it would already come , it is even an overdue natural crash.

It was not a crash came on, it was just a normal dip, there is nothing strange with this and this kind of dips are always common in here. In fact, they are just another opportunity to keep buying more and then enjoy the profits.

[cryptocrusher]

Hi folks.
Just sharing this interesting views of a poster on reddit:

The cause of today's chaos is likely large hedge funds using expiring BTC futures contracts as safety nets to exploit the only sure-thing in this market: a large amount of new/overextended investors who are easily moved to panic sell during a flash-crash.

It is likely that such drop is clearly caused by manipulation indeed, I find this theory interesting.
One can also notice that every year since 2015 there is always a drop in January and this may be also due to Chinese new year. This is also possible but I don't believe small holders will cause such drop, so the hedge funds theory is more likely.

You can read more here > theory on the real cause of today's chaos

I think that despite all of the valid reasons for the crash the overwhelming and definitive one is manipulation. Even with all of the negative news the crash we experienced should not have been so great. Many large holders etc can manipulate the situation to their advantage and crash the market beyond the point that seemed correct, so as to benefit themselves.

[peter0425]

That might be true I don't know. But why do we need such theory to explain this crash? I think it would already come , it is even an overdue natural crash.

It was not a crash came on, it was just a normal dip, there is nothing strange with this and this kind of dips are always common in here. In fact, they are just another opportunity to keep buying more and then enjoy the profits.

You really don't know what's the difference between a market crash and a healthy price correction.

Hi folks.
Just sharing this interesting views of a poster on reddit:

The cause of today's chaos is likely large hedge funds using expiring BTC futures contracts as safety nets to exploit the only sure-thing in this market: a large amount of new/overextended investors who are easily moved to panic sell during a flash-crash.

It is likely that such drop is clearly caused by manipulation indeed, I find this theory interesting.
One can also notice that every year since 2015 there is always a drop in January and this may be also due to Chinese new year. This is also possible but I don't believe small holders will cause such drop, so the hedge funds theory is more likely.

You can read more here > theory on the real cause of today's chaos

I never heard such theory before, well of course it's the first time that we have such bitcoin future contracts offerings and may be very well used by financial institutions to create panic and newcomers bailing out of the market.

Well manipulation was the name of the game here, there are here to stay as much as we don't like them. Bitcoin is really becoming a playground for the big boys. They can do whatever they want, whenever they want to their benefits.

[player514]

Hi folks.
Just sharing this interesting views of a poster on reddit:

The cause of today's chaos is likely large hedge funds using expiring BTC futures contracts as safety nets to exploit the only sure-thing in this market: a large amount of new/overextended investors who are easily moved to panic sell during a flash-crash.

It is likely that such drop is clearly caused by manipulation indeed, I find this theory interesting.
One can also notice that every year since 2015 there is always a drop in January and this may be also due to Chinese new year. This is also possible but I don't believe small holders will cause such drop, so the hedge funds theory is more likely.

You can read more here > theory on the real cause of today's chaos

I don't really see the whole Chinese new year theory that you also broke down. You're right, there are too few people who hold that money AND also celebrate Chinese new year AND would be willing to sell in order to have cash for the event. At each stage of that statement, you end up knocking out more and more people, until you're left with such a small population percentage.

It's (what I believe) mostly a snowball event. A couple of investors pull their money out, the prices go down, more people panic sell, and those who don't panic sell end up buying the dips and panic sellers come back in on the way up. It's cyclical and will continue to happen.

[dothebeats]

Could be, could be not, however market manipulation is not new in the scene, and with the addition of the futures markets (which, again don't have any direct relation with bitcoin's market), the exploits on weak hands just get even wider and bigger. Before Wall Street even came, whales have been doing the same technique to get more bitcoins out of poor people's hands who are afraid to lose some dollars on their investments.

But on the other side of the spectrum, it could be that the crash is just an after-effect of the recent regulations imposed by Indonesia and China. As we all know, the market also tend to follow the recent news and react accordingly. The theory is common yet still sensible to say the least.

[BitHodler]

Bitcoin is really becoming a playground for the big boys. They can do whatever they want, whenever they want to their benefits.

It has always been like that, which directly applies to all markets in the world. I however don't really see it as a problem at all, because their manipulation can also play out in your own favor.

In most cases it's pretty obvious that the market is up for another manipulation attempt. In this case it was a bit worse than expected, but still somewhat predictable if we look at how there was no fuel left to move forward.

I managed to buy some coins at the lower levels of the dump, and I hope all smart people have done so. I didn't expect it to dive under the $10,000 mark, but this unexpected event turned out to be a wonderful opportunity.

[Scripture]

A clever theory on futures contract indeed but i am thinking, if it has to be true, then a lot portion of the bitcoin market engaged on this particular contract. The bitcoin's amount dropped so low that means about almost 10% of the holders has their contracts expire this day. The remaining 90% sure has a futures contract signed after that indicated date you said and will expire later on. So, it means that BTC's price will continue to get down this month according from what the theory said.

[need100]

It might be, but I doubt. In reality the crypto market fall happened due to the information from China and Indonesia, when these Asian countries' governments said they would regulate crypto.

[DustyRah]

We are going to see quite a bit of sell offs till Chinese owners of Bitcoin sell out and China altogether leaves the crypto world behind.

The Chinese government is working towards the removal of crypto from their world and all of those sell offs will come around bit by bit.

https://www.coindesk.com/china-moves-to-crack-down-on-digital-currency-pyramid-schemes/

On top of that now IMF is involved with crypto and they will surely do their best to screw around with it because otherwise their cushy jobs will be lost along with the enslavement of all the countries with their paper based loans.

https://www.coindesk.com/imf-calls-for-international-cooperation-on-cryptocurrencies/

This will be the year of crypto vs regulations. Crypto cannot be beaten...it will split into a thousand pieces like bubbles and rise to the top.

[Youghoor]

It might be, but I doubt. In reality the crypto market fall happened due to the information from China and Indonesia, when these Asian countries' governments said they would regulate crypto.

No, this is false, and it was more than four days ago, are you outdated or you are just posting in order to increase your activity?

Fucking shit posters..

Anyway, today's chaos was just caused because of FUD and PANIC, maybe more because of weak hand's people.